Vernon Fire & Cas. Ins. Co. v. Sharp, 1-474A57
Decision Date | 04 September 1974 |
Docket Number | No. 1-474A57,1-474A57 |
Citation | 161 Ind.App. 413,316 N.E.2d 381 |
Parties | VERNON FIRE & CASUALTY INSURANCE COMPANY and Great American Insurance Company, Defendants-Appellants, v. A. W. SHARP d/b/a Columbus Wood Preserving Company, Plaintiff-Appellee. . First District |
Court | Indiana Appellate Court |
Mark W. Gray, John T. Lorenz, Kightlinger, Young, Gray & De Trude, Indianapolis, William A. Conner, Walker & Conner, Columbus, for appellants.
Charles E. Brown, Crabbe, Brown, Jones, Potts & Schmidt, Columbus, Charles R. Wells, Columbus, for appellee.
Defendant-appellants Vernon and Great American (the insurers) are appealing from a jury verdict awarding plaintiff-appellee Sharp compensatory and punitive damages.
The four issues argued by the insurers are that the amount of compensatory damages was excessive; the award of punitive damages was error; error in rejecting evidence of Sharp's understanding of his insurance coverage and, the failure to include interest in the verdict was inconsistent with an award of punitive damages, therefore contrary to law.
We find no reversible error.
Sharp owned a creosoting plant which was operated by John Easter. The insurers had issued identical fire insurance policies to Sharp covering certain immovable fixtures and personal property at the plant. On June 7, 1971, the plant was virtually destroyed by fire. Sharp filed suit against the insurers on September 2, 1971, after they had rejected his proofs of loss.
At the trial stipulations were made that the insurers were liable under the policies; the policies were in effect at the time of loss and covered the property destroyed; and acceptance of Sharp's estimated loss of $94,108.09. Neither insurer presented testimony in their behalf.
The jury returned a verdict of $31,250, the face value of the policy, as compensatory damages and $17,000 in punitive damages against each insurer.
The insurers' first contention that the jury's verdict for the face value of the policy is excessive is based upon a pro-rata clause which says the policy 'covers its pro-rata proportion of and on the following amounts.' The clause was followed by a schedule of items each being assigned a dollar value.
Each insurer maintains that they are only liable for one-fourth of the value of each destroyed scheduled item, for a total of $23,527.02 each. The basis for their position is testimony that the total value of all insurance equalled $125,000. (This testimony will be discussed later in this opinion.)
Sharp on the other hand, contends the total of all insurance was $62,500, the combined total of the insurers' two policies. Sharp relies, in part, on another policy clause which reads:
'This company shall not be liable for a greater proportion of any loss than the amount hereby insured shall bear to the whole insurance covering the property against the peril involved, whether collectible or not.'
We understand the general rule to be that pro-rata clauses do not come into play when the amount of the loss exceeds the face value of the concurrent insurance policies. See, i.e. Couch on Insurance 2d § 62.56, p. 504. Here the jury heard evidence from which they could find or infer that the loss was more than $94,000 and the insurance amounted to a total of $62,500. This being the case the jury's verdict has a valid legal foundation.
The insurers next argue that a good faith dispute existed between the parties which makes the submission of punitive damages for the jury's consideration contrary to law. The dispute about the amount of liability, they maintain, negates any question of fraudulent, malicious, or oppressive conduct on their part. They also argue that error existed when the trial court did not construe the contract of insurance for the jury but instead instructed the jury that the policies were to be construed in Sharp's favor if ambiguity did exist.
In answering the second contention first, the general rule is that the trial court should construe a contract if it is not ambiguous. United States Fidelity & Guaranty Co. v. Baugh (1970), 146 Ind.App. 583, 257 N.E.2d 699. However, it has also been held that it is not reversible error to allow the jury to construe a contract if it appears from the record that the jury placed the correct construction upon it. Vulcan Iron Works Co. v. Electric Magnetic Gold Min. Co. (1912), 54 Ind.App. 28 99 N.E. 429. We believe the latter situation occurred in this case for the reasons discussed...
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